Zinc producers, including Vedanta Group firm Hindustan Zinc, have sought imposition of five per cent import duty on finished products of the metal, primarily used by steel industry, a move aimed at stimulating demand and stabilising prices in the domestic market.
The industry has petitioned the government for imposing duty, which was scrapped in April this year as part of the inflationary measure when zinc prices had spiralled, official sources said.
Giving the rationale behind imposition of import tariff, the industry said it would provide protection to the sector by making the overseas shipments (about 50,000 tonnes annually) competitive.
“Post-imposition of the duty, the prices for imported zinc would go up, thereby inclining buyers to opt for domestic variants,” an official of a zinc company said.
It has also become essential for the government to protect the domestic industry as the total surplus zinc in warehouses of London Metal Exchange (LME) has increased to a whopping 250,000 tonnes and there is a possibility of cheap supply to India, he added.
The LME rates of zinc act as international benchmark for minimum pricing of the base metal.
If the government agrees to levy import duty on zinc, mainly used by the steel sector for making galvanised products, the domestic industry would stand to gain, said experts.